Benefits Realisation Case Study

Enterprise Solutions Project (CA521)

The Enterprise Solutions project was designed to support the radical reform of London’s public services by supporting ground-breaking activities currently taking place in London’s local authorities to develop public services run under innovative new social enterprise linked delivery models. The project was also designed to provide evidence led understanding for whether and how independent delivery models can deliver better public services, which could then be shared and embedded in future projects to improve public services. The project was led by Lambeth Council and involved partners from Richmond, Lewisham, and Ealing Councils, the latter being replaced by Kensington and Chelsea during the project. The RSA (and formerly Social Enterprise London) were the lead consultants in delivering the project.

Reports and findings

There are four main reports produced as part of the Enterprise Solutions project. These look in detail at the learning to be drawn from the experiences of the four borough partners as they explored how some of their services might become independent social enterprises. One report compiles lessons learned in relation to barriers and solutions to mutualisation. A toolkit offers practical support for public service leaders considering the complex and highly demanding challenge of ‘spinning out’ of public ownership. Another report examines how commissioning might change to support public service mutuals in promoting social value, and the final report steps back, takes stock of where the mutualisation of public services has got to and looks forward.

Barriers and solutions to public sector spin outs report looks at the range of challenges facing services considering spinning out and considers solutions. The results suggest that there are a number of key barriers that the four LAs encountered during the spin-out process.

1. The need to communicate effectively and ensure stakeholder buy-in, both internally (senior management, staff, elected members) and externally (service users, trade unions).
2. The capabilities of service staff and other relevant LA staff were found to be essential, both in planning the spinout and developing a robust business plan. There is also a need to identify what external expertise is required to deliver a successful spin-out.
3. The need to be fully aware of the local and national policy environments was also found to be important, both in securing buy-in and support at a local level and in being aware of the support that was available at a national level (i.e. Mutual Support Programme).

The report also draws out the potential benefits of spinning out services which were clearly articulated by the participants, and which relate to independence, financial freedom, the ability to behave innovatively and to be responsive to service users.

A practitioners’ guide to spinning out from public ownership was developed to address the lack of easily accessible information for staff members, or guidance that honestly captures the frustrations, complications and excitement of the transition, that the boroughs who participated in the ‘Enterprise Solutions’ identified as being a gap. The guide was based on a co-design workshop which took place involving frontline professionals. The workshop attendees acknowledged that there is a growing literature of guides and toolkits already which contain comprehensive and detailed information on the technical aspects of spinning out, and there was no need to recreate another document that would do the same. Instead, they identified the need for a document that provides an honest and open account of the experience of exploring mutualisation, and the practitioners guide was developed to do so.

**New approaches to commissioning and public service mutuals: Lessons from co-operative councils** considers where mutualised spin-outs might sit within new approaches to commissioning. As central government and local authorities are recognising that new and more strategic approaches to commissioning are vital for ensuring the long-term sustainability of public services and driving better outcomes for citizens, councils are exploring new ways of meeting the needs and aspirations of their residents, including a stronger role for new providers such as social enterprises and public service mutuals. As social value gains currency and cost-based and process-driven commissioning and procurement are increasingly challenged, many expected organisations such as public service mutuals to flourish, yet progress has been slow. This report looks at the experiences of three local authorities, including Lambeth, who are among a growing number of councils adopting a co-operative approach to local government. The report suggests how a clearer focus on social value during commissioning brings with it a clearer focus on where mutualisation could be strategically fruitful.

**Public service mutuals: Spinning out or standing still?** produced by the University of Northampton and the Transition Institute, assesses how the evidence base and the policy arguments around mutualisation have evolved in recent years. The report starts by looking at the evolving policy environment within which public service mutuals have been conceived, reconsidered and encouraged, and finds strong continuities between the last Labour government and the Coalition. The report identifies ongoing concerns about successive governments’ failure to ensure access to capital for the new organisations, it suggests that a maturing business support sector for mutuals gives grounds to believe that steady growth is nevertheless possible. The report goes on to look at how the evidence base around public service mutuals has evolved, particularly since the Coalition came to power, finding evidence for greater creativity and commitment in mutualised services, but also that the skills required for successful business planning may not be found in-house. The conclusion suggests that, just as the Enterprise Solutions project has itself seen, a range of solutions, including but not limited to mutualisation, so the future of spin-outs is likely to take a number of different forms. Employee-led mutuals may grow, but so too will collaborative models, joint ventures, asset transfers and in-house trading companies.

Other project outputs and tools include an animation – **Public service mutuals: The story of a spin-out** – which gives a fictionalised account of what teams can expect if they decide to form an employee led mutual. The video is aimed at public service staff teams, for whom the idea of mutualisation can be alien and alarming, and is based on the real experiences of projects within the Enterprise Solutions project.

**Project legacy**

The Enterprise Solutions project provided support to four London councils as they explored how they might establish some of their services as independent social businesses.

**LB Lewisham:** Five libraries had already spun-out from the council when the project began. The unique model, which includes the development of community libraries and transferring the leases of the buildings to a social enterprise, was seen as being able to give an insight into how councils can take an innovative approach to revitalising their services and delivering substantial efficiencies. Support was provided to a social enterprise assigned the lease of three of the buildings to help them develop a business plan. Lewisham were also actively involved, along with 2020PSH (RSA), in organising a roundtable event looking at the experiences of library services in trying new models of ownership and control – including mutualisation – to meet the challenges they face. The event was filmed and is available as a video.

**LB Lambeth:** The Campaigns and Communications team, the focus of Lambeth’s project, received support in the development of a business plan, and to meet their research requirements around TUPE implications and competing for contracts (which was written up as a project output). The team has now become a trading company owned by the council and has begun trading. It has a name, LamCo, and has clients. The plan, with the backing of the council, is to continue on the journey and become an independent organisation outside of the council in 2014.

**RB Kensington and Chelsea:** RBKC joined the project in June 2012 when Ealing had to withdraw. Their youth service was already in the process of spinning-out from the council. The service received support in business planning and undertaking a skills audit. In addition a social value ‘logic model’ was developed for the youth service (which was written up as a project output) and staff training was provided on impact measurement and setting indicators. The youth service, now named EPIC, became an employee-led mutual in April 2013.

**LB Richmond:** The purpose of Richmond’s project was to identify whether a social enterprise spin out was possible within the adult social services department, specifically working with people with learning disabilities in the area of supported employment and training. Having explored spinning-out, senior management decided against doing so due to a lack of consensus on whether a spin-out was the best option for the service.

There is evidence that the reports and other tools have been widely accessed. The animation, for example, has been viewed around 260 times and has been mentioned by colleagues in local government and policy circles. The report on the relationship between spin-outs and co-operative councils is to be uploaded on the website of the Co-operative Councils Innovation Network – a membership based council group with around 20 corporate members. The research presented in the ‘Barriers and Solutions’ report, undertaken by the University of Northampton, has been used as the basis of an academic article, currently with *Policy and Politics* journal for peer review, with publication likely in mid-2014.

**Full copies of the reports and further Information**

For full copies of all the reports that were products of the Enterprise Solutions Project and for further information, please see the following link:

http://www.thersa.org/action-research-centre/community-and-public-services/2020-public-services/past-projects/enterprise-solutions-public-service-mutuals

Mark Picksley, Lambeth Council, December 2013